The following blog post is part of The Road to Financial Wellness blog tour. The Road to Financial Wellness is a three-month, grassroots campaign promoting financial empowerment on a national level and encourages people to pursue their dream lifestyle. Find out more about local events near you.
I can’t say much about poverty in other countries, but I know quite a few things about poverty in the U.S. I also find it so interesting to hear people share when they actually realize they’re in poverty. My blog is called ‘My Debt Epiphany’ after all. So I take a big interest in hearing stories about when people have that Aha! moment in regards to their financial situation.
Well this is my personal story. When I was growing up, my parents had their share of financial issues. My dad worked a good job for Empire Blinds back when that was a booming company and my mom held random jobs on and off but she loved being a stay-at-home mom and raising my sister and me in between those odd jobs.
At that time, it didn’t seem like we were poor, but fast forward several years, add two more kids to my family and consider the fact that my parents separated. My dad no longer had his shiny good-paying job and my mom became a single mom. Extracurricular activities and other extras stopped and life became all about merely surviving.
I became pregnant in high school and graduated a semester early in January. Then, I gave birth literally five days later to my precious son. Now I was a single mom with a poverty level income that was essentially zero. A great start to a promising financial future right?
How Is Poverty Defined in the U.S.?
According to the U.S. Census Bureau, poverty is mainly defined by one’s income before taxes excluding capital gains and losses. Poverty income rates can vary from state to state and factors like family size, and age group play a role as well.
In simpler words, living in poverty in America means you earn low wages, don’t have enough money to meet your basic needs and expenses – like paying for food and housing – , and have less opportunity than those in middle or upper classes who seem to be better off.
In 2014, 46.7 million people in the United States lived in poverty. I suspect generational poverty to be the reasoning behind such a high number. People don’t just end up poor out of the blue. Often times, something goes wrong in their family’s economical system which gets passed down from generation to generation. Generational poverty refers to having lived in poverty for at least two generations.
Since this is my story about my path toward financial wellness, I wanted to discuss how I broke the chains of generational poverty and found more opportunity for myself, my family, and my child.
How I Broke Out of Poverty
It started by attending college.
My parent’s didn’t attend college and neither did their parents. Plus, their skills were limited and no one ever spoke about investing or income diversification so that knowledge was lost. Having a child at a young age motivated me to want to attend college more so I could provide for him.
While I don’t believe college is the answer for everyone, it was the answer for me and provided me with the education and insight I needed to break out of poverty. I filled out a FAFSA and qualified for the maximum amount of grants each year.
I gladly took out $20k in student loansto fill in the gaps and help fund my living expenses during college.
For a $20k sacrifice, I gained a whole new outlook on life and tons of marketable skills and work experience. I worked two internships, studied abroad, and learned a ton of valuable information about my desired career field. By the time I graduated, I focused on diversifying my skill set to become more marketable to employers so I would be able to find a job easier.
Instead of just mastering traditional journalism work, I also excelled in copy writing, public relations, marketing and communications just in case I had to go into those fields for a job.
I grew up in diverse neighborhoods.
I used to envy the people who grew up in the same neighborhood their entire life because my family moved constantly and it made me feel very unstable at times. I went to three high schools and one was a college prep that was located in the city of Chicago and listed as one of the 100 top schools in the U.S.
By living in so many different areas throughout the Chicagoland area, I got to meet and interact with a diverse range of people from all walks of life. On one hand I saw people struggling financially and on the other, I saw a great deal of people thriving financially so I knew I could do it too.
I felt so enlightened and equipped with the necessary tools and resources to improve my situation and pass my financial literacy down to my child.
I created my first budget a few years ago, started spending less, paid off five figures of debt so far, and most important, I feel sooo much more stable. I don’t have to wonder how my bills will get paid, what will happen if I spend $20 extra on groceries and what I would do if I suddenly needed car repairs because I now have a reliable cash flow, a strong handle on my situation, and plenty of money in the bank.
I may not be financially independent yet, but I feel much more free than when I was in poverty. For anyone struggling to overcome poverty or just trying to improve their financial situation, I have a few key additional tips.
1. Get a Second Job
When your income is low, it can be holding you back from financial success. The best thing you can do is get a second job or start a side hustle to bring in extra income.
Even if you only work extra hours for a few months, it can help provide you with money to put into a savings account and meet your expenses but I recommend increasing your income this way for at least a year if you can’t get a significant raise at your current job or in your field of work.
2. Know When It’s Time to Get Off Welfare
When you take on additional work to earn more money, you may be pressured to revoke some government benefits like food stamps, medical and childcare assistance and so on.
It can be tough to walk the thin line of barely being able to support yourself but not qualifying for any assistance because you “earn too much” but it’s so worth it. Nobody wants to be on welfare for the rest of their lives so it’s important to know when the assistance has served its’ purpose during your time of need and let it go.
3. View Lifestyle Inflation as the Enemy
When you earn extra money or things start to improve, don’t inflate your lifestyle. Don’t start dining out more just because you can afford it. Don’t take that trip when you’re still battling the paycheck to paycheck cycle. It will only offer temporary relief that will cease immediately after the experience is over.
Instead, focus on your ultimate goal and continue to live like you were living. Delaying your gratification for just a few more months will only make you strong and your bank account larger.
4. Suck Up Financial Literacy Resources and Concepts Like a Sponge
Financial literacy and motivation are the key elements to overcoming poverty. Thanks to the internet, everything you need to know about money is right at your fingertips so don’t take advantage of it.
Now I want to hear from you. If you’ve ever had a low income, how did you make ends meet? Also, how have you improved your financial wellness so far?
STOP Living Paycheck to Paycheck
You can't break free from the status quo when you're living like everyone else. Get one of the free spreadsheet tools I used to pay off $35,000 of debt quickly, build an emergency fund, and break the paycheck to paycheck cycle.